China Eximbank reschedules $389.7 million preferential buyer’s credit for the Datka-Kemin 500kv Transmission Line Construction Project (Linked to Record ID#39619)

Project narrative

On February 24, 2012, the Ministry of Finance of the Kyrgyz Republic submitted a loan application to China Eximbank for the Datka-Kemin 500kv Transmission Line Construction Project. Then, on June 5, 2012, China Eximbank and the Ministry of Finance of the Government of the Kyrgyz Republic signed a $389,795,000 preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2012) 20 TOTAL NO. (208)] for the Datka-Kemin 500kv Transmission Line Construction Project. The PBC (loan) agreement was ratified by the Kyrgyz Parliament June 19, 2012. The loan (PBC) carried the following borrowing terms: a 20 year maturity, a 9 year grace period, a 2% interest rate, a 0.25% management fee, and a 0.25% commitment fee. The State Agency for Budget Credit Management under the Ministry of Finance of the Government of the Kyrgyz Republic on-lent the proceeds of the loan (PBC) to a state-owned company known as National Electric Grid of Kyrgyzstan, OJSC (or Joint Stock Company “National Grid of Kyrgyzstan” or OJSC Natsionalnaya Elektricheskaya set Kyrgyzstana or OJSC NES of Kyrgyzstan or NEGK). The proceeds of the loan (PBC) were to be used by the end-user (ultimate borrower) — National Electric Grid of Kyrgyzstan, OJSC — to finance 100% of the cost of its $389,795,000 commercial (EPC) contract with Tebian Electric Apparatus Stock Co., Ltd. (TBEA), which was signed on February 23, 2012. According to the Government of the Kyrgyz Republic’s Aid Management Platform (AMP), the first loan disbursement (of $77,959,000) took place on August 30, 2012 (to support a 20% advance payment to the EPC contractor), the second loan disbursement (of $5,982,563) took place on December 17, 2012 (to support a payment for the manufacturing and supply of equipment); the third loan disbursement (of $159,942,800) took place on December 31, 2013; and the fourth loan disbursement (of $100,489,000) took place on December 31, 2014. The same source notes that, as of 2014, the loan disbursement rate was 88.3%. (And total loan disbursements amounted to $344,373,400). According to internal data that the Kyrgyz Ministry of Finance shared with AidData in July 2022, this loan achieved a disbursement rate of 100% as of December 31, 2021 and its amount outstanding was $393,713,137.12 as of December 31, 2021. The purpose of the project was to construct a 288 km, 500kv power transmission line from Datka to Kemin and a substation in Kemin. TBEA was the general EPC contractor responsible for implementation. Project implementation commenced on August 20, 2012 and the project reached completion on August 28, 2015. The official inauguration of the transmission line took place on September 1, 2015. However, the Datka-Kemin 500kv Transmission Line Construction Project has underperformed from a revenue generation and debt repayment perspective. On December 9, 2019, a Settlement Agreement was signed by Joint Stock Company “National Grid of Kyrgyzstan” and the State Agency for Budget Credit Management under the Ministry of Finance of the Kyrgyz Republic. Under the terms of the Settlement Agreement, overdue repayments (arrears) were included in an updated repayment schedule (amortization table) without any change to the loan’s final maturity date. According to the audited financial statement of Joint Stock Company “National Grid of Kyrgyzstan” for the year that ended on December 31, 2019, ‘[t]his restructuring […] led to significant changes in the amortized cost of loans from the Export-Import Bank of China.’ The original loan (PBC) that was issued on June 5, 2012 is captured via Record ID#39619. The December 9, 2019 rescheduling is captured via Record ID#96098.